Marketing, advertising & media intelligence

With a plethora of platforms in the market, New Zealand’s media climate is experiencing some major shifts. Here's a snapshot of PwC’s latest research on the various platforms and how they are performing in the country.

Internet advertising

New Zealand’s total internet advertising market’s revenue had doubled from 2011 when the market was valued at $338 million, to 2015 when the amount was $828 million.

Total advertising revenue is forecasted to grow at 13.8 percent CAGR, rising to $1.58 billion by 2020.

55.8 percent of New Zealand’s total internet advertising revenue is generated by paid search.

Google is responsible for more than 90 percent of all searches.

Paid search internet advertising revenue is expected to be worth $897 by 2020.

Mobile advertising accounts for only a small share of the overall internet advertising pie, but is projected to see strong growth over next five years, rising from $29 million in 2015 to $161 million in 2020.

In the same period 870,000 New Zealanders are forecasted to become mobile internet subscribers, incentivised by faster mobile internet connections.

Newspaper publishing

Print circulation is on course to almost half in the decade to 2020, from 629,000 average daily unit circulation print in 2011 to just 321,000 in 2020.

Newspapers’ reach has shrunk to one-third of adults, most of them in an older demographic.

In 2015 more people were using the internet than newspapers at breakfast for the first time, according to Roy Morgan Research.

Internet ad spend in New Zealand has more than doubled in the past five years, but print has fallen from $573.43 million in 2011 to $410 million in 2015, and is forecast to hit $243 million in 2020.

Overall total newspaper industry revenue is forecast to decline from $733 million in 2015 to $585 million in 2020 at a -4.4 percent CAGR.

Internet access

New Zealand had a fixed broadband penetration rate of 93.7 percent in 2015, most in the medium speed category.

By the end of September 2015 Ultra-Fast Broadband passed 815,000 premises and had signed up 133,684 customers.

The target is for UFB to connect 75 percent of New Zealand’s homes by 2019.

The number of fixed broadband households is expected to rise at a 1.9 percent CAGR to 2020, with 47.1 percent of them being high-speed fixed broadband households.

Fixed broadband access revenue will increase from $853 million in 2015 to $1.048 billion in 2020.

Areas outside the UFB coverage zone are being targeted by the Rural Broadband Initiative (RBI), mainly on Vodafone's and Spark's LTE infrastructure along with some fibre. By September 2015, 271,009 homes in remote rural areas were covered

LTE will help increase the number of mobile internet subscribers to 3.6 million by 2020, from 2.7 million in 2015.

73.5 percent of mobile connections will be high-speed in 2020, compared with 35.8 percent in 2015. Mobile internet access revenue will grow from $679 million to $1.089 billion over the same period.

Radio

New Zealand's total radio revenue was $281.6 million in 2015, down 2.9 percent from 2014. Made up of advertising revenue only, the market is forecast to fall fractionally by 2020.

MediaWorks is currently the leading radio network.

Digital is propelling broadcasters’’ growth strategies with them rolling press, digital and radio news teams into one operation to better serve the fast-growing mobile audience.

There is a growing focus on capturing the older demographic. MediaWorks launched a new station, Magic, in April 2015 aimed at targeting the 50-69 age group.

GfK is the new provider of the annual commercial radio survey, taking over from TNS.

Advances in radio measurement will likely boost revenue.

Alternative forms of audio entertainment like Internet radio and podcasts that can be accessed from smartphones are already posing a threat to traditional radio broadcasters. Internet radio services include iHeartRadio and Pandora. Pandora for example, reported in June 2015 that globally it had more than 79.4 million “active” users.

Book publishing

Total books revenue in New Zealand, consisting of consumer, educational and professional books revenue, will be $557 million in 2020, up from $441 million in 2015, rising at a 4.7 percent CAGR.

From 1 October 2016 a 15 percent goods and sales tax will be applied to the sale of e-books from foreign retailers. This tax is expected to have a small impact on the number of e-books sold but not on the overall consumer spend.

Consumer books electronic revenue will rise from $39.59 million in 2015 to $76 million in 2020, growing at a 13.8 percent CAGR over the next five years as such methods of reading continue to see take-up.

Magazine publishing

New Zealand's total magazine revenue, comprising total consumer magazine revenue and total trade magazine revenue, will be $511 million by 2020, up from $492 million in 2015, representing a CAGR of 0.7 percent.

Tablet ownership continues to rise in New Zealand, which is helping the sales of digital editions. Digital consumer magazine circulation revenue will grow at a 12.2 percent CAGR between 2015 and 2020, rising from $36 million in 2015 to $64 million in 2020, while print consumer magazine circulation revenue will fall at a -0.7 percent CAGR.

Digital consumer magazine advertising revenue will also increase over the forecast period from $33 million in 2015 to $55 million in 2020, at a 10.2 percent CAGR, although print consumer magazine advertising revenue is set to fall from $129mn in 2015 to $96.79 million in 2020, decreasing at a -5.3 percent CAGR.

Cinema

Cinema attendance in New Zealand has remained steady in spite of increasing competition from online platforms and alternative ways of accessing filmed entertainment.

Box office revenue was up to a new high of $199mn in 2015. It is predicted to keep rising to 2020 at a 2.1 percent CAGR, with admissions also rising from 2015's 15.3mn to 16.5mn in 2020.

The local industry has been buoyed for many years by The Lord of the Rings and The Hobbit trilogies. But with the Avatar sequels as well as several other international films shooting in the country, New Zealand is maintaining its reputation for affordability and technical excellence.

Out-of-home advertising

New Zealand’s total out-of-home (OOH) advertising revenue was $85 million in 2015. The market is forecast to grow by a 3.7 percent CAGR and will see total OOH advertising revenue of $102mn in 2020.

Digital OOH (DOOH) advertising revenue stood at $30 million in 2015. Over the forecast period DOOH advertising revenue is forecast to grow by a CAGR of 15.4 percent and reach $63 million in 2020, accounting for 61.1 percent of total OOH advertising revenue. APN Outdoor's construction of the country's largest digital billboard at Auckland Airport in 2014 was a notable milestone for DOOH in New Zealand.

New Zealand is a leading exponent of near-field communication technology in DOOH.

The launch of an NFC payments scheme, Semble, by two New Zealand banks in 2015 will provide a further boost, potentially allowing DOOH installations to act directly as points of sale.

Business to business

New Zealand’s B2B market was worth $901 million in 2015 and is forecast to rise to $1.064 billion by 2020, at a CAGR of 3.4 percent

Directories is the largest sub-sector, with $325 million in total directory advertising revenue in 2015. A downturn in print directory advertising revenue will be offset by digital, resulting in a CAGR of 1.3 percent over the forecast period, and by 2020 digital directory advertising revenue will account for 58.2 percent of total directory advertising revenue.

Business information is the second-largest B2B sub-component and will grow at a CAGR of 2.8 percent from $327 million in 2015 to $272 million in 2020.

Trade shows is the smallest B2B category, accounting for just 4.0 percent of total B2B revenue in 2015.

Music

New Zealand's music market was worth $205 million in 2015, down from $225.9 million in 2011. Total music revenue is forecast to reach $223 million in 2020, rising at a 1.7 percent CAGR.

In the space of five years, during which time Spotify, Apple Music, Tidal and many others have opened in New Zealand, digital music streaming revenue has grown from less than $1.5 million in 2011 to $34 million in 2015 and the figure should grow to $89 million in 2020.

The business for digital downloads, however, is declining and by 2020 digital music downloading revenue will account for only 11 percent of total digital recorded music revenue.

Physical recorded music revenue accounted for $66 million in 2011, a figure that fell to $28 million in 2015 and should recede further to just $10.6 million in 2020.

Total recorded music revenue was measured at $91 million in 2015. By 2020 that sum is predicted to grow to $111 million, which is $15 million greater than the total from ten years earlier.

TV advertising

Despite consistent economic growth, New Zealand's total TV advertising revenue suffered a decline in 2014. But this setback was minor and growth of 1.9 percent in 2015 saw revenues reach $613 million. Stronger expansion at a 4.0 percent CAGR will produce a new peak of $748 million in 2020.

Terrestrial TV advertising revenue continues to dominate, taking 76.4 percent of total TV advertising revenue in 2020. While this is down slightly on 2015 as multichannel TV advertising revenue expands at a slightly faster rate, terrestrial TV advertising revenue will still pass pre-recession levels to reach a new high of $541 million in 2020.

Some 44 percent of the population had a tablet by end-2015 and this will reach 64 percent in 2020. Online TV advertising revenues were just $19 million in 2015 but by 2020 they will have reached $45 million — some 6.0 percent of the wider TV advertising market.

TV and video

TV and video revenue is forecast to rise at a 3.0 percent CAGR to $1.3 billion in 2020, from $1.1 billion in 2015.

Subscription TV households of 868,000 in 2015 represented pay-TV penetration of 58.5 percent, and this will rise to 72.3 percent in 2020, with 1.1 million subscriptions.

Sky Network TV has struggled to maintain subscriber numbers over the past year, with 851,561 subscriptions at mid-2015 down from a high of 865,055 a year earlier. This has not yet had an impact on revenues, which rose slightly on the two previous years.

Sky announced in October 2015 that 2016 profits are likely to fall 11 percent. This was put down to increased costs in delivering new services like Neon, FanPass and Sky On-Demand.'The home video market is for now led by physical home video revenue, producing $262.5 million in 2015. As with all markets around the world, this figure is expected to decline to $200 million by 2020.

Netflix’s launch in New Zealand brought strong competition to the market, the service’s price may increase, however, with the government adding a tax on sales of digital services by foreign companies in October 2015.

The ‘Netflix tax’ also includes potential fines for consumers using virtual private networks (VPNs) to pretend their computer is overseas when buying online services.

From a low base, electronic home video revenue is forecast to see a 16.5 percent CAGR to 2020, rising from $45.46 million in 2015 to $95 million in 2020.

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